Where housing's happening around greater Portland (and what had to happen)

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By Craig Beebe and Nick Christensen

Oct. 25, 2016 1 p.m.

Bylined articles are written by Metro staff and do not necessarily represent the opinions of Metro or the Metro Council. Learn more

New homes are needed. Where are they getting built – and why?

Another year, another round of breakneck population growth in greater Portland – the region added more than 100 residents a day from 2014 to 2015, and it's showing no sign of slowing.

Supply of new homes – from apartments to detached houses – simply hasn't kept pace with that growth, particularly in some of the most desirable urban and suburban communities.

But you don't have to look hard to see new houses and apartments under construction in greater Portland. From apartment towers and split lots filling in Portland's inner neighborhoods, to complete suburban communities sprouting up at the edges of the urban growth boundary and across the Columbia River in Washington, the clamor of construction is happening all over the region.

Still, the road to real homes for real people – a key turning in the lock as a new resident comes home for the first time – can be winding.

It takes more than land to get construction going. The urban growth boundary includes thousands of acres of vacant land still waiting for dirt to move and houses to go up, while many communities have long planned for urban development that's only recently started.

So what does it take to make new homes happen? We checked in on a few places seeing active construction in the Portland region today to see what had to come together – and to gauge just how affordable the results have been.

The Modera Belmont under construction at 7th Avenue and Belmont in Portland. The six-story development will have 200 apartments when finished in 2017. Portland's Central Eastside has seen thousands of units enter the development pipeline in recent years.

Central Eastside

The historic "pantry" of Portland – home to produce wholesalers along with a variety of other industries for nearly 150 years – the Central Eastside has been reaping a new kind of fruit in recent years. An orchard of construction towers make plain that the area between the Willamette River, 12th Avenue, Interstate 84 and Division Street is booming.

It's just one of several neighborhoods seeing a lot of growth in Portland city limits, which has been leading the region in total units constructed in recent years by a large margin. The Pearl District, South Waterfront and Lloyd District are all hotbeds of new construction, not to mention the hundreds of new homes and mid-rise apartment buildings being mixed into other more established residential neighborhoods throughout the city.

But the once-gritty Central Eastside stands out. Its proximity to downtown Portland and high transit access, plus a vibrant mix of jobs – particularly a growing cluster of creative office space – make it an attractive place for renters, said Portland planner Troy Doss in an email. Indeed, the Central Eastside was the only central city neighborhood to add jobs during the Great Recession, the Portland Development Commission says.

How many homes? In 2010, the Central Eastside had 957 units of housing, mostly in apartments. Since then, 1,342 units have been completed, under construction or permitted in the neighborhood, in developments ranging in scale from the 62-unit Lower Burnside Lofts to the 284-unit Yard, a 22-story tower that just opened by the Burnside Bridgehead, and the 358-unit LOCA development at 11th and Belmont, which is nearing completion. Another 716 units are in the review process. All told, that would bring the total number of units in the Central Eastside to more than 3,000.

What had to happen? The Central Eastside has been one of Portland's 13 urban renewal areas since 1986. Though much of the Portland Development Commission's work in the area has been focused on job creation and retention, the agency has also helped create housing opportunities in the Burnside Bridgehead area, where it has sold five blocks it purchased years ago. The agency has used its tax-financing strategies to support investment in transit, roads and other infrastructure improvements. It also dedicates 45 percent of a key portion of its tax financing to the Portland Housing Bureau, which has helped with several developments.

PDC and Portland planners have targeted most of the housing development in a few key areas, like the Burnside Bridgehead and along Martin Luther King Blvd., Grand Ave., Belmont St., Hawthorne Blvd. and 11th and 12th avenues, preferring to let employment be the primary use in other areas.

In July 2015, the Portland City Council adopted a 20-year Southeast Quadrant Plan seeking to protect industrial jobs while allowing for considerable growth in housing and creative office space, including multistory industrial spaces. Part of the policy: Protecting business owners from new residents' complaints about employment activities that would likely be unwelcome in most residential neighborhoods. Achieving that balance in the years to come will continue to be a challenge in the area.

How affordable are homes? Most of the homes in the area are studios and 1-bedroom apartments for rent. "The area and housing being developed probably best suits young professionals, retirees and empty nesters," Doss said. And new market-rate apartments in the neighborhood are expensive. Studios are commonly around $1,700 a month, while 1- or 2-bedroom apartments can cost upwards of $2,000 to $2,500.

Some developments in the area have included regulated affordable units. In a property tax deal with the city, The Yard reserved 20 percent of its units for people making under 60 percent of the median family income, around $29,000 for a single person or $41,600 for a family of four. And one current project in the neighborhood, St. Francis Park, is being developed by Home Forward in collaboration with a Catholic church to be fully affordable for people earning that amount or less. Still, these two developments add up to less than 200 total affordable units in the neighborhood.

If the boom continues, more affordable units might come with it in the future. The Portland Housing Bureau and Bureau of Planning and Sustainability are developing a program that could require market-rate developments to include affordable units in the future, using a mix of sticks and carrots for developers. A draft code was released in September; the Portland City Council is expected to hold hearings in December. And early last year, the Portland City Council extended the urban renewal area's boundaries south to the area around the Clinton Street MAX station – with a stipulation that housing there must include affordable units.

New apartments under construction in North Bethany in September 2016

North Bethany

It has been a long road to new homes in the North Bethany area of Washington County, amid the rolling hills north of Highway 26. The 691-acre area was added to the urban growth boundary in 2002 and could one day have 10,000 residents in upwards of 4,000 homes. Today, the area is under active construction, with several subdivisions complete and others on the way.

A look a Google Maps satellite image reveals just how quickly construction is proceeding – ghostly tracks of new streets cross what still look like farm fields in some areas, while other areas show up as either active construction sites or sudden neighborhoods seemingly dropped from the sky.

Good access to big Washington County employers like Intel and Nike and a substantial amount of land in a scenic location are both helping drive growth toward North Bethany. The area also includes the Portland Community College Rock Creek campus. Plans also call for integrating natural areas, trails and parks into neighborhoods’ design, as well as a major “Main Street” mixed-use area that planners hope act as a hub for the community when complete.

How many homes? Since 2014, about 800 single-family houses and 370 apartments or condos have been permitted in the North Bethany area. Some neighborhoods, like the 290-home Bethany Creek Falls, are largely complete, with new homes, streets and parks already filling with families. While most of the homes built so far have been single-family detached houses, construction of apartments and townhomes is picking up, county staff report.

What had to happen? North Bethany is a poster-child both for the litany of the challenges that often beset urban growth boundary expansion areas, and for the hard work between local, regional and private partners to get land ready and homes built.

First, there was the issue of which local government would lead the development process. Beaverton had once intended to annex the area, but then withdrew, leaving Washington County to take over.

For Washington County officials, the blank slate was a complex puzzle. How would they pay for roads to connect residents with the Sunset Highway? Where would rainwater runoff go? How would it all get paid for?

The county had to figure out how to upgrade rural roads into the area and build new arterials for traffic both to the neighborhood and within it, and how to extend service like water, sewer and fire protection into the area.

"It was a new process for a lot of stakeholders, but it was also during the downturn, so we were able to slow down and have more lengthy detailed discussions and deliberations of how things should play out," said John O'Neil, vice president of Metropolitan Land Group, a developer in North Bethany.

A $1.2 million planning grant from Metro in 2007 helped create a development plan with a $69 million funding strategy for roads, pipes and other infrastructure. Those will be paid for by a mix of county taxpayers, developers and property owners in North Bethany through a new community service district.

"And then the recession lifted, and all this pent-up demand was unleashed," said Washington County planner Suzanne Savin.

Finally, the Washington County Commission relaxed rules on developing sloped properties and natural area buffers in the area in September 2015, which could lead to more housing construction, though that move was controversial with some residents and land advocates.

Even though the process took longer than many had expected, O'Neil said the lessons learned have been useful in other expansion areas, such as South Cooper Mountain in Beaverton, River Terrace in Tigard and South Hillsboro.

And it's paid off for North Bethany's new residents, too. "It's turned out to be a great community," O'Neil said.

How affordable are homes? In recent years, the average home sold in North Bethany has cost around $500,000 for a little over 2,300 square feet, the county reports. A new apartment complex set to open later this year, North Bethany Ridge, has rents starting at $1,450 for a 1-bedroom apartment and $2,075 for a 3-bedroom.

New homes in Villebois, Wilsonville, in September 2016.

Villebois

A couple of decades ago, one of greater Portland's newest communities had a much less appealing housing plan.

State officials planned a prison on the west end of Wilsonville. But persistent lobbying by the city, a second look from state officials and a compromise led instead to the community of Villebois.

The prison went to an industrial area on the north end of Wilsonville. With hundreds of acres to work with, city officials started planning a community that could have thousands of homes.

But building a community isn't as simple as firing up the bulldozers and hammering together 2-by-4s. Wilsonville officials had to develop a plan to build roads for commuting residents; pipes to bring water from their homes, and take waste away; parks and schools for people to play and learn.

How many homes? Last year, a record 330 homes were built in Villebois. There won't be that many openings in 2016, but Wilsonville Planner Chris Neamtzu said another stack of 120 home plans was recently submitted to city officials. Overall, about 1,700 of the 2,600 homes planned for Villebois have been built.

What had to happen? "It comes down to the fact that there was an incredibly well-thought-out finance plan," said Neamtzu, who has been working on Villebois since 2003, when a development concept plan was completed.

For starters, the city created an urban renewal area covering the Villebois vicinity. That allowed the city to issue bonds that would be paid back off the future property taxes collected at the site.

When the urban renewal district was established, the area had a taxable value of about $15 million. Today, there's more than $376 million in taxable private property in the community.

None of that would have been possible without urban renewal, Neamtzu said. The city was able to spend millions upgrading roads to Villebois and the Wilsonville Road interchange at Interstate 5.

"We had to go build an interchange first," Neamtzu said. "Those are tough things to go out and accomplish. Because of urban renewal, we were able to do that."

Overall, Wilsonville's urban renewal district paid for $70 million of improvements around Villebois; private developers matched that with improvements in the community.

"We're an incredibly small city compared to most, and this has been a big challenge for us," Neamtzu said. "One way or another, my planning team is working on implementing that project every single day. There's a lot of risk, political risk, but we had a willingness to have vision and push the envelope."

How affordable are homes? Villebois includes a variety of housing styles at different prices. Detached new homes for sale in Villebois are listed at around $355,000 for a 1,376 square-foot house and $485,000 for a 2,600 square-foot house, up to nearly $650,000 for a 3,740 square-foot house. Attached homes for sale cost as low as $257,000 for a 1,260 square-foot home. Available rental units in one apartment complex range from $1,380-$1,880 a month for a 1-bedroom, 1-bathroom apartment, up to more than $2,000 a month for a 3-bedroom, 2-bathroom unit.

Construction continues on new homes in Happy Valley, Clackamas County.

Happy Valley

Perched atop the list of Oregon's fastest-growing cities for several years running, the Clackamas County city of Happy Valley is seeing rapid housing construction in several places, but especially along its eastern edge, where once-rural roads like 172nd Avenue are being overhauled with sidewalks, more lanes and roundabouts to serve residents of new subdivisions commuting to work and new shopping centers.

In 2000, the city had 4,519 residents; by last year, it had jumped to nearly 18,500. Notably, the community's population includes one of the region's highest shares of Asian Americans, at 17 percent compared to Portland's 7 percent.

Good schools, parks and a scenic location amid the buttes of northern Clackamas County are helping attract growth, but planning director Michael Walter says much of the city's growth comes down to simple land availability: The city has a lot of vacant land inside the urban growth boundary either in its boundaries or immediately adjacent, particularly in the recently dis-incorporated city of Damascus.

Happy Valley has been long been growing from west to east. The western half of the city was in the original Portland regional UGB in 1978. Many of the areas seeing rapid development now were added by the Metro Council in 1998 and 2002.

How many homes? As of Sept. 30, city records estimated about 340 buildable single-family lots existed throughout the city, with most being permitted for construction. Another 2,200 single-family lots were in some stage of the planning process. Most of these were in subdivisions of less than 60 units, but a few – like the Scouters Mountain development, at 600 homes, or the Pleasant Valley Village, at 1,100 homes, are larger. About 300 multi-family units were under construction in two apartment complexes, with another 265 in the planning process.

What had to happen? Walter says Happy Valley has planned ahead for each of its major expansion areas with full comprehensive plans that include transportation and coordination with many other service providers, such as water and sewer providers. Metro has helped by giving grants to the community for some of these plans, like the East Happy Valley Comprehensive Plan, which received a $169,000 grant from Metro in 2007.

It can take a while for those comprehensive plans to come to fruition. The plan for Rock Creek, one area approaching build-out, was adopted in 2001. The plan for the 2,100-acre East Happy Valley area now seeing a lot of construction was adopted in 2009.

One of the biggest needs before growth can happen in these areas is adequate roads, pipes and other infrastructure to handle it. Since Happy Valley has one of the region's lowest tax rates, the city leans heavily on developers to pay.

"All the infrastructure we're talking about doesn't just pop out of the ground," Walter said. "If the development community isn't doing it, it isn't going to get done."

Another challenge that's come as a result of the city's approach to growth, Walter says: A major imbalance between where Happy Valley residents live and work. Most residents leave the city each day to work, squeezing onto congested arterials like Sunnyside Road and Interstate 205. According to the U.S. Census, about 41 percent of the workers living in Happy Valley work in the city of Portland.

With the recent disincorporation of Damascus, Happy Valley is poised to annex quite a bit of developable land on its eastern frontier. Walter says the city will first need to begin yet another land use and transportation plan before it can develop those areas. He says it might take a while, but if the market stays strong he expects the city to continue growing east.

How affordable are homes? According to developer Tom Liesy, who has several small subdivisions under construction or permitting throughout the city, most new homes in Happy Valley are priced in the high $300,000s or low $400,000 for an attached single family home, but more like $500,000 or more for a single-family detached home. That puts the city's new houses about 25 percent above the regional average home sale price.

Of course, developers need to turn a profit, and many of the costs they pay to acquire land and get permission to build on it get passed on to homebuyers and renters. But there's only so much the market can bear. It's one reason that many lots in the city are getting smaller, Liesy said.

An aerial view of South Hillsboro before construction began on its first subdivision, Reed's Crossing, began this year. Photo courtesy City of Hillsboro.

Coming soon: South Hillsboro

How does a piece of flat land, more than halfway surrounded by urban development, become a great community?

We're about to find out.

Construction on greater Portland's newest master-planned community, South Hillsboro, finally got underway this summer. The area was added to the urban growth boundary in 2011, and has long been sought as a site for more home construction.

But with that construction came significant costs.

How many homes? The first subdivision under construction, called Reed's Crossing, is expected to include 2,800 single-family homes and 930 multifamily units along with significant commercial areas on 422 acres. The first homes are expected to come online in 2018. Hillsboro planners project that all told, the 1,400-acre South Hillsboro could one day have 8,000 homes and 20,000 residents.

What had to happen? In planning the full build-out of South Hillsboro, officials identified nearly a quarter-billion dollars in transportation projects that would be needed to avoid gridlock in the area. The centerpiece of that effort is work on Cornelius Pass Road – a nearly $20 million widening project north of the development, and a multi-million dollar extension south of the Tualatin Valley Highway through South Hillsboro.

Metro provided about $157,500 in a 2006 planning grant to help Hillsboro develop part of its concept plan for South Hillsboro.

Colin Cooper, Hillsboro’s planning director, said the city went through extensive transportation modeling to envision a system that would help connect residents with jobs – and get people moving across a state highway and a rail line on the north end of South Hillsboro.

About $41 million in streets will be paid for by private developers – and, ultimately, homebuyers – leaving a $213 million bill for roads alone in South Hillsboro.

Water and sewer pipes are expected to cost another $44 million, and parks and other open spaces could cost another $100 million – all for about 8,000 new homes.

The development costs, said Hillsboro transportation planning supervisor Gregg Snyder, will vary depending on when homes are purchased. They’ll start around $8,000 per home and increase over time – but, those costs will be included in mortgage payments, not due up front.

“People will be able to finance that when they buy their home,” Snyder said.

The financial plan, which also includes a local improvement district, does two key things – it makes sure existing Hillsboro residents don't foot the bill for new growth, and it expedites construction on infrastructure projects.

“We want to time (developers’) ability to sell homes with the time transportation improvements that serve those homes are going to be ready and open to traffic,” Snyder said.

South Hillsboro always seemed to make sense for new development. Residents will be only about a 20-minute bike ride from Intel’s massive Ronler Acres campus, and all of the arterials and connectors through the project will have separated, protected bikeways. The area will also have 15 miles of multi-use trails.

Its proximity to another UGB expansion area – the 1998 expansion in the Witch Hazel community to the west – helped answer some development problems. It also will help support a town center-type retail area planned in South Hillsboro.

“It’s a tremendous focal point for new residents, and for existing residents to the west and east who are currently underserved,” Cooper said. The city is also working with TriMet to improve transit access to the community.

That means Hillsboro at large will benefit from a development that is paying for itself.

“That’s been essential to this project,” Cooper said. “One of the challenges was creating a structure where growth pays for itself.”​

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